Basics of Arbitration

What is
arbitration? Arbitration is a legal
mechanism used to resolve disputes through the aid of a neutral third-party who
is given the authority to make a legally binding decision. The weight of this decision is what
distinguishes arbitration from mediation.
The parties are not obligated to follow a mediator's decision. In arbitration, both parties must agree to be
bound by the arbitrator's decision before entering into the process. The arbitration process consists of written
submissions from each party and an evidentiary hearing to establish the facts
of the case.

Arbitration
hearings are private proceedings conducted according to the U.S. Arbitration
and Mediation rules. Because they are
not handled by the court system, the information disclosed and final decision
do not become part of the public record.
Likewise, members of the public are not permitted to attend arbitration
hearings as they would a normal court proceeding. Another benefit of arbitration over a regular
lawsuit is that the parties are able to set the parameters of the hearing to
suit their individual needs. Some
factors that can be adjusted include limiting the number of witnesses that may
be called, restricting the arbitrator's award to only cover certain issues, and
deciding upon the amount and type of evidence to be provided by each party.

The mechanics of
an arbitration hearing are similar to a normal trial court proceeding, with
both parties being given a chance to make their case. Each party is allowed to make an opening
statement and present their evidence, then question their witnesses, and make a
closing statement. The opposing party is
also given an opportunity to cross-examine the witnesses. Because this is a private proceeding, the
formal rules of evidence do not apply and a broader range of information
becomes admissible. Some arbitration
cases are decided only on the basis of written statements and no evidence or
witnesses are present, but this depends on the parameters set by the parties
before entering the arbitration process.

The process of
choosing a neutral third-party arbitrator is set out by the U.S. Arbitration
and Mediation rules. The arbitrator must
be acceptable to both parties before the process is begun. This gives arbitration another advantage over
a standard trial because the parties are able to choose a third-party who is an
expert in the subject of the dispute instead of having to accept the decision
of a judge who may not have any technical knowledge of the industry.